I added, for me, a double tax free muni fund (FMINX) to my income sleeve a few years back. Since, then I have been buying about every six months (late fall and early spring) as part of my seasonal investment strategy. Seems bond funds are the weakest during this period while stocks seem to be the strongest. For me, my tax equilvent yield is a little above 4% while the 10 Year Treasury is currnetly paying just short of 2.4%. This in of itself explains, in part, why they are in such demand.

You could have written that headline 20 years ago...
That said, tech is -- and will --put severe financial pressures on many industries -- displacing (or buying or replacing) them.
(Physical-) travel agents? (Mostly - )Long gone.
Retail? Check.
Pay/cable TV? -- Amazon prime, Netflix, and (soon-) streaming Disney/Fox content direct.
Many others too. Glad I will be out of the workforce soon. The "AI job-pocalypse" is coming...

I’ve felt it was “value time” for the past 5 years. But that’s just me. Not everybody sees it that way.
On the other hand, doubt anything out there is really cheap. Proceed at your own risk.
Warning: You are about to enter the “annual distribution zone.”
(PRPFX was the first of mine to take a haircut today.)

Maybe it is a good time to sell. Any of you remember how much the market loved the turmoil Nixon brought on? I wish I had an in-house lawyer who would say he was the one speaking when I had put my foot in my mouth. More will be revealed, but it won't be good for the market.

All I remember about RMN’s impact on markets is that he is/was the only Pres. during my lifetime to impose unilaterally an immediate temporary freeze on wages and prices. (Hope I’ve described the 1971 executive order accurately.) I was 20-something at the time and enroute to my first good paying post-college job when the news broke over the radio.
Sell decisions are fraught with peril as several here and at FA have noted over the years. For longer term investors there’s the dilemma of when to get back into the market. It’s a coin-toss at best that they’ll manage to re-enter at lower prices than they sold. Even for older investors with shorter time horizons there’s the risk of forgoing substantial future gains should the markets run hot for several more years. Than there’s the sector issue. An overvalued S&P or high yield market doesn’t necessarily mean that deep value, financials or industrial metals are overvalued. Sometimes the opposite is the case as hot sectors tend to pull money away from more tepid markets. Hope I’ve made clear that despite my misgivings about the current market euphoria, I could never recommend to someone else that they sell.
What I haven’t heard mentioned lately is the Presidential election cycle. But that’s a whole different topic.

I guess the author of this WSJ article didn't have much time before his deadline -- it's brief and doesn't say much.
I think Morningstar had more information recently, comparing donor-advised funds from different investment firms. Their focus was more on how these funds perform as investments over time.
I've used the Fidelity Charitable Trust for about ten years and never considered this as a place to grow money. My time horizon is generally fairly short. I'll move some mutual fund shares or shares of stock into FCT and place the funds in the money market fund there, then direct the "grants" to charities fairly quickly.
There are several advantages. As the article says, I get the credit for the charitable contribution in the year I make the deposit, even if the individual grants are not delivered until the next year. Fidelity allows small grants; I've given $100 to a local homeless shelter (which met Fidelity's guidelines), whereas some other donor-advised funds have much a larger minimum.
Fidelity sends cash; some charitable organizations might have a hard time handling shares of stock, or especially shares of mutual funds.
Donating this way gives you a tax deduction for the entire amount of your contribution, no matter what your basis. I've donated some small spinoffs just because I didn't want to figure out the basis. I gradually donated one entire mutual fund position over a period of years, after accumulating it over a very long period of years (with reinvested dividends and monthly contributions); I did not want to try to establish my cost basis.
Of course, there is a small fee assessed annually.
It's usually best to donate appreciated assets and a donor-advised fund makes it simple to do this. It's all online and your past giving history is readily available.
David

Junkster's Forum Comment
Here is looking at you @MikeM.
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Re: Bond OEFs - what now
Junkster 11-02-2017, 11:05 AM | Post #3880685 |
0
>>>> FD says "Most of my money is in 3 horses PIMIX,IOFIX and NHMAX(switched from PHMIX was luck or skill??). IOFIX last jump was 8/22, are we going to see the next one this month? let's see if the pattern will continue.<<<<<<
Hope you are right about IOFIX FD. My problem is when a pattern becomes too well known and predictable....... Last year it had a big jump on September 30 and then it wasn't until February 24 of this year for the next one. Plus AUM which have grown dramatically may impact the pattern. But I will stay put with IOFIX for awhile. Pimco's Mark Kiesel said just the other day that non agencies are mispriced and " are among the few bonds that have price upside"
I've found a newer fund and a mini IOFIX I haven't seen mentioned anywhere. It's not available in all states and I contacted them to have it blue skied in my home state of KY which takes but a few weeks. I went through that process with SPFRX when it was a young fund back in 2015. Regardless, looking forward to 2018 and seeing where the momentum will be. Junk corporates are so unloved because of valuations they may surprise. Or maybe bank loans because we may have more aggressive rate hikes.
Will check back in next year. After this post immediately deleting all my trading and investing forums. Winter off trail hiking is just around the corner. At 70 years old hanging out on forums has lost much of its appeal. Good luck to everyone.

@VintageFreak
This fund has been in my portfolio since 2015. Watching to see what happens with current fund management and holdings makes sense. Polen Capital executes a specific process. The remaining managers know that process. The firm has been putting some focus into international investing in recent years. I'll hold on to see how things go in 2018. Given the low turnover rate and small number of holdings, I don't expect there will be any rapid decline in performance over the short term due to the management change. So, I don't feel a need to make a rushed decision.

FYI: Do some months have significantly different market returns than others?
This calculator uses sixty-odd years of S&P 500 data to let you see for yourself. Select a month; the calculator will show you its good and bad years and overall return, for the years from 1950 until recently.
Regards,
Ted
http://www.moneychimp.com/features/monthly_returns.htm
CXO Advisory Trading Calendar: December
https://www.cxoadvisory.com/trading-calendar/december/

Everyone has their own preferences and tolerances for risk. Obviously I'm willing to extend risk a bit on credit. Perhaps that's because even when bonds implode there's usually a good recovery rate - it's not like stocks going bust. Well, except for Lehman, Puerto Rico, etc. Pick your poison.
I noted in the thread on DODIX that on average, over the long term (full market cycles), leverage adds value. I'm just not comfortable with the type of risk it adds, especially when interest rates may rise for many years.
PIMIX leverage specifically seems to be relatively recent (again, see DODIX thread). In fairness, the way that fund is using leverage might be thought of as arbitrage. In a "traditional" sense, leveraging is borrowing against assets to buy more, e.g. 2x funds. You're amplifying risk by buying more of the same.
But PIMIX, at least at the moment, seems to be borrowing shorter term (-48% cash exposure) to "safely" lend long term (using the borrowed cash to buy US gov/Treasuries). That's what banks do. Works okay most of the time, but rising rates can create a squeeze when borrowing rates rise while they're locked into earning fixed long term rates.

In these vehicles $10k has gone to ~$42k and $26.5k since you bought, so yeah, take your equivalent of $7k or a bit more from Contra and put it into Pimco.
OR ...
It depends on your goals and discipline and tenets. Are you a strict (re)balancer? Do you like / are you willing to let things that have done well run?
Most important, what are your needs and horizon? I mean, many of us run into this all the time. I myself would probably leave all alone if you do not need the money for several years. But that is the aggressive / greed of another speaking. Otoh, if you need some of this in less than, I dunno, 3-4-5y, then yeah, rebalance to Pimco. How important is 50-50 to you ?

Whew. I have had VZ as an income stock on and off for 5 years, selling for tax losses almost every year, then watching it. come back up. In June, it was down to 44 and change, and I bought it for 53 last December. Sold it today at $52.36 just before the news hit about Trump having asked Flynn to meet with Russians. For once, sold at near 12 month high :) Down to a $500 loss from a loss of almost 5k. May rebuy again next year, will see.

@ expatsp, Admittedly it is a young group, but Minerds history goes back to Credit Suisse and Morgan Stanley. They seem to believe in deep pools of analysts and team approach. There is also a retail version of the fund GIBLX which is ntf at Fido. I can understand the history issue, but that is why I have more than one bond fund and decided to buy it two years ago when I expanded my bond fund pres ence when one of my munis was called.

Another guy writing stuff that's misleading, probably because he doesn't understand it. Do an instant X-ray on the 4 sector etfs in the fund and you'll find out it is NOT a value fund. I haven't tried to test that over its entire history but I'd be surprised if it's ever been a value fund based on M*'s definitions and how other funds are classified. When I've done that in the past it has always ended up as a growth fund or a blend fund close to the border with growth. People naturally think investing in the 4 lowest CAPE sectors (excluding whichever one of the "cheapest" 5 has the worst momentum) is a value approach and maybe it is, but that's not what this fund is doing. It's investing in 4 of the cheapest 5 based on the CAPE ratio relative to it's own history. So if technology has traded at an average CAPE ratio of 400 over the last 10 or 20 years (sorry, can't remember the precise details) and its only trading at a CAPE ratio of 300 today while Energy is trading at 25 today but has historically traded at 20, then technology is the "cheaper" sector in ranking terms for determining the funds investments.
The approach has worked very well and may continue to work but it has not led to a "value" portfolio based on the definitions M* uses to categorize other funds, it's not necessarily invested in sectors with the lowest traditional CAPE value and it's the traditional CAPE value that has proven more predictive of future (long-term) performance than most other things.
Outperforming value funds when it has "growth" investments is meaningless even if people keep writing about the fund that way. Buyer beware!! For transparency sake I do own the fund and I like it. I just don't appreciate the way it tends to be written about because I think it's likely to make people believe they're getting something that they really aren't.

@msf Thanks for these careful thoughts and list, very much appreciated. FWIW, right now I look to bonds for ballast, so I'm only in RPHYX and SUBFX. In the past I invested is LSBDX and did okay, but since it was in a taxable account, it felt more sensible to have that money in equities for that kind of risk/reward curve.
If you like RPHYX, what do you think of RSIVX? It hasn't gotten a lot of love on this board since David's initial write-up, but it seems to be doing what it promised: providing a little less return than standard high yield bond fund with quite a bit less risk.
I'm tempted to put some money in it that I expect to need for a down payment in 2 years or so.

">> As I've posted before, the fact that Fidelity does not currently have a cash offer on the table does not mean that it has not done so in the past or will not do so again in the future.
Cool. Not in the 45y I have been with them, I think, but I know you will find the truth."
See link embedded in the quoted post (only in original, not quoted version):
http://www.mymoneyblog.com/fidelity-brokerage-ira-transfer-bonuses.html

Bonus amount: $200 for $50k+, $300 for $100k+, $600 for $250k+, $1,200 for $500k+, and $2,500 for $1M+ net new assets.

I've since found a better link that describes the same (now expired) 2017 offer as well as what the page correctly characterizes as a unique offer by Fidelity - to match your IRA contributions (in the 401k percentage sense, not dollar for dollar) for three years. Both were 2017 promotions.
https://investorjunkie.com/11001/fidelity-promotions/

Short lists and explanations in 2nd half below.
I invest for total return, not income. That leads to the question I keep asking myself, so why invest in bonds at all, when equity does better over the long term?
One reason is diversification - one never knows what will do better from one year to the next. Using bonds for this purpose is a bit like buying insurance. It costs you money (bonds won't do as well long term), but it provides protection against short term drops in the worst case.
I buy that, but only to a limited degree. So I'll use more aggressively managed bond funds that include areas like high yield that are more equity-like. (That is, I favor core plus and multisector over vanilla core funds.) I'm not giving up quite as much in return, but I'm also not getting quite the diversification benefit that a vanilla fund would provide. It's how I choose to position myself on the risk/reward curve. Each person has his or her own comfort level.
With that same nod to aggressiveness, I also use bond funds as cash alternatives. Obviously this is a different type of bond fund from those used for total return.
General attributes I would like the funds to have :
- Low costs. Really important in bond funds, where correlation between performance and cost is high.
- Convenience, but I'll only pay a little for that. I've no problem paying $5 to Fidelity to buy more of a TF fund. On a $5K purchase, that comes out to 0.1%, often less than the cost of owning a different fund that's NTF, especially over longer periods of time.
Personal dislikes:
- Leverage. I'm fine with 100% exposure to risk with my investment. Don't give me 150% risk exposure.
- MBS. The fact that there are several pricing models shows that these are hard to value. More important is that with their built in call options (early payoffs), they behave badly when yields shift quickly. A rise in rates causes borrowers to hold on to their mortgages, thus increasing duration and amplifying the drop in bond price. (Negative convexity.) A side effect is that duration numbers for these securities can be deceptive. They're good diversifiers in a broad bond fund; I just don't want a fund hooked on them.
Macro observation: I almost never time markets. But one must pay attention to the fact that we've had a 35-40 year decline in interest rates that has begun to reverse. IMHO the question is how fast and how far that will go, but not if. This makes it important to watch how interest rate risk is handled.
=============
Core plus funds (nothing without some blemishes):
- BCOIX - good performance, low cost. Flexible with credit risk (i.e. it's core plus), it can't do much about duration. "The Advisor attempts to keep the duration of the Fund’s portfolio substantially equal to that of its benchmark."
- MWTRX - you used to be able to get MWTIX with a $25K min at Schwab. Now it's $100K. Retail class is slightly pricey. Years ago, managers contrasted their fund with Pimco Total Return by saying that they had the luxury of focusing on issue selection, while Gross was limited to macro calls due to the size of his fund. Now MWTRX is bloated and performance has declined over the past three years. Still fine management.
- DODIX - cheap, good performance, flexible on credit risk, defensive on interest rate risk. All positive. Not a fund I would have thought of as core plus (my impression was more vanilla), but upon closer look has a nice mix of securities. Main concern is its increasing popularity and girth.
- WCPNX - just started looking at this (see MFO thread for others' thoughts). Slightly pricey (0.61%), but FWIW, NTF. More importantly, I was impressed a few years ago (last time I looked) with Weitz Short-Intermediate (now Weitz Short Duration) fund WEFIX. Same managers here. I also like that this fund has a somewhat short duration. Needs more research.
- EIBAX - Gaffney's been there for 2.5 years. She didn't do well at her first EV charge EVBIX. Perhaps she was trying too hard to prove herself, but she got overly aggressive, loading up with equities and commodities. This is a tamer fund, though still wild. Hard to even call it a core plus, given that it's allowed 35% in junk and 35% in foreign. That describes a multi-sector fund, leading us to ...
Multi-sector funds (the usual suspects) - used for manager-allocated exposure to junk and foreign bonds.
- PIMIX - sharp manager, great past performance, but with qualifications I've already noted, like leverage and a fondness for MBS. Also, what happened to all the voices who seem to cry out "mean reversion"? (Here though, there are specific market conditions that one can point to that suggest lower returns going forward.)
- LSBDX - a manager who claims experience in investing the last time interest rates rose; that raises succession as a concern. Ridiculously volatile, but acceptable to me for something this far out on the portfolio risk curve (aggressive multisector). I like that it has shortened its duration. A quirk in its prospectus allows unlimited Canadian investment, perhaps a way to increase non-dollar exposure without going overseas.
- FSICX - an easy buy if you use Fidelity, else costly. Generally solid fund.
"Enhanced cash"-ish bond funds - used as buffer for equity investments (to draw from when funds have dropped in value)
Muni funds - you need to go out at least a couple of years in duration to get yields high enough to justify skipping the bank account.
- BTMIX - a young fund, but with a solid management team that's been around a long time
- VMLTX - Vanguard = low cost, conservative management
Taxable funds
- RPHYX - pricey, but with a unique strategy that keeps it sufficiently ahead of banks to justify the risk. I still don't think it scales, so it is good that this is closed.
- FPNIX - I've followed this since the Rodriguez days, when you couldn't get it without a load. Now you can, but Atteberry may have tamed the fund a bit too much. Where else do you find interest only derivatives used so extensively for defensive purposes? That dates back to Rodriguez.

Thought I would put my changes I recently made into this thread. Sold MINDX which I have held for over 4 years and had some nice profits in. It is over 24 x PE and felt I really did not need a single country fund for diversification and it may start to level out.. I am probably overdiversified as some had commented on in the portfolio posting threads, and I added to SIGIX, FMIJX and GSIHX with the proceeds. Also added to VWINX and will do more over time. Not anticipating any material changes through year end but taxable account may see some tax loss selling.

Hi @bee
Per your question about rising rates and effects upon RE related, I will offer a chart and a few thoughts. You and all others must keep in mind that I have no formal training in this area. My self - issued and printed "School of Hard Knocks" diploma is placed upon the wall as a reminder about not getting sassy. :)
Knowing you enjoy fiddling/viewing this type of data (I do, too) I have used the same chart from the earlier post for selected RE funds, but have removed SPY and placed $UST30Y. So, keep in mind while viewing the chart that the turquoise line for the 30 year bond is "YIELD" and not price.
Wait, wait.....there's more, so be patient before clicking that chart link.
Notes:
--- I'm leaving this chart at the 200 days default in the slider bar. This is automatic after entering tickers and clicking "GO".
--- The dates just below the chart are 7 day periods.
--- In this 200 days chart, one may discover 2 cross over periods immediately which reflect the change in the 30 day yield and the price changes of included RE funds. Period 1: = early March, 2017 and moving to the left, Period 2: = early November, 2016. You'll have to move the left bar of the slider to the left to get to November, 2016.
--- Relative to these cross over periods, and to view others moving left on the chart to early years; left click and "hold" on the 200 days section and drag this days time frame.
@bee etal, not unlike cross over "price" points in charts you have posted previous, just keep in mind the 30 year yield "when moving towards the top of the chart is an increase in yield" and not a price as is indicated with the RE funds.
--- Cursor on any of the chart lines. Place the cursor upon a chart line, anywhere; and the price and date will display. This includes, for this chart; the yield and date for the 30 year Treasury.
--- You may also "right click" on the 200 days slider section to display preset time frames which may then be selected/clicked upon.
--- This chart is active and you may enter which ever tickers you want to examine. Save the site page in favorites or where or however to revisit and play with other tickers.
NOTE: tickers less that 3 years old will not generally be found for display at this site; at least as a "free" user.
http://stockcharts.com/freecharts/perf.php?VGSIX,FRIFX,CSRSX,FRESX,$UST30Y&n=200&O=011000
Short and quick answer appears, that yes; "long term" interest rates do cause reactions to real estate funds.
Been a long, long day. I will do my best to revisit sometime tomorrow about other aspects of what these charts sometimes show to me and viewing with investment fundamentals and technicals in mind.
Good night,
Catch

Hi @bee
As we know the markets are sometimes silly, funny and most times difficult to attempt to find proper paths for our money (adjusted for one's risk style). Since the market melt, anticipated and accepted gains have been found in many areas. This is not rocket science (at least in hind sight). :) ........ was one helluva "value" market in March, 2009, yes?.
The following graph is one that I have constructed/viewed previous, is of interest; at least to me, as how areas have changed here and there. This graph are funds I have selected as long term real estate active managed funds for a "fair" comparison. I've also included SPY.
In particular for me, is that the time period for this chart (Sept. 2008 to date) shows very favorable for total return of FRIFX against the other funds, including SPY. However, if one moves the "left" slider adjustment (on the day bar, showing 2,326 days) all the way left to 2003; one will see how different the return of FRIFX was from 2003-early 2009 was during this period and also, overall from 2003 to date showing FRIFX got its butt kicked by other real estate funds. Those who have held the other RE funds since or before the 2003 date are still doing okay.
So, what happened to the other fine managers of RE funds since March, 2009 vs lonely FRIFX? Are the managers having that much difficulty sorting and trying to find where in the world of American real estate they should be invested? Two very different periods of returns, eh?

http://stockcharts.com/freecharts/perf.php?VGSIX,FRIFX,CSRSX,FRESX,SPY&n=2326&O=011000
FRIFX fund composition has been about 50/50 equity/bonds for as long as I can remember. Although much less showy than other RE funds, this fund just chugs along as of the past 9 years, not unlike PIMIX and other funds out there, of which I am not aware.
Composition: https://fundresearch.fidelity.com/mutual-funds/composition/316389865?type=o-NavBar
FRIFX remains a much different RE fund from its peers. I have not plowed through the holdings of the other funds charted here; but FRIFX has some of the same holdings as other funds, with the variance being the bond holdings. There is investment grade, mortgage and junk (a fairly big chunk) bonds.
The only year FRIFX was #1 in the category is 2008. The average RE fund was down about -40% and FRIFX was down -31%. Generally, the fund is always in the last 10% of the category per M*. The current 30 day SEC yield is about 3.8%, average bond duration of 2.55 years and has an annualized 10 year return of 7.34%.
The fund is still about 10% of our total portfolio.
Lastly, a quick look chart which includes FREL. This chart only goes back to Feb. 2015, as FREL is quite new. IYR and FREL travel together at this time.
http://stockcharts.com/freecharts/perf.php?FRIFX,FREL,IYR,SPY&n=709&O=011000
Well, anyway; I recall @Ted wondering why we weren't playing with the big dogs in the world of RE. The charts speak for themselves at this point in time. We'll see, eh?
This time remains different, IMHO.
I didn't proofread this.....pick my write for errors or omissions.
Take care,
Catch